Doing business in China sure is no cake-walk.

Last month I blogged on the corporate governance issues confronting businesses wanting a piece of the action in China. In addition, more than $900 billion of bad loans has been piling up there, according to the Consumerism Commentary blog.

Now Ernst & Young has ordered an internal inquiry into the beancounters publishing a controversial report on China's non-performing loans. Ernst & Young withdrew the report after the People's Bank of China attacked it as "ridiculous and barely understandable". E&Y now claims its estimate of bad debts for the country's big four state banks "cannot be supported and . . . is factually erroneous". Funny about that.

Meanwhile, there is a report that PricewaterhouseCoopers is being sued by Shanghai Waigaoqiao Free Trade Zone Development Co Ltd which has claimed negligence in the way PwC audited its 2003 and 2004 accounts.